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Securities
 12 Months Ended
Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]  
Securities
Note D
Securities
 
The amortized cost and fair value of securities available for sale and held for investment at December 31, 2015 and December 31, 2014 are summarized as follows:
 
 
 
December 31, 2015
 
 
 
Gross
 
Gross
 
Gross
 
 
 
 
 
Amortized
 
Unrealized
 
Unrealized
 
Fair
 
 
 
Cost
 
Gains
 
Losses
 
Value
 
 
 
(In thousands)
 
SECURITIES AVAILABLE FOR SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities
 
$
3,833
 
$
78
 
$
0
 
$
3,911
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
 
192,224
 
 
847
 
 
(1,322)
 
 
191,749
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
242,620
 
 
470
 
 
(4,900)
 
 
238,190
 
Private mortgage-backed securities
 
 
32,558
 
 
0
 
 
(766)
 
 
31,792
 
Private collateralized mortgage obligations
 
 
77,965
 
 
700
 
 
(708)
 
 
77,957
 
Collateralized loan obligations
 
 
124,477
 
 
0
 
 
(1,894)
 
 
122,583
 
Obligations of state and political subdivisions
 
 
39,119
 
 
882
 
 
(110)
 
 
39,891
 
Corporate and other debt securities
 
 
44,652
 
 
37
 
 
(416)
 
 
44,273
 
Private commercial mortgage backed securities
 
 
41,127
 
 
13
 
 
(720)
 
 
40,420
 
 
 
$
798,575
 
$
3,027
 
$
(10,836)
 
$
790,766
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SECURITIES HELD FOR INVESTMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
$
64,993
 
$
574
 
$
(16)
 
$
65,551
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
89,265
 
 
581
 
 
(406)
 
 
89,440
 
Collateralized loan obligations
 
 
41,300
 
 
0
 
 
(1,360)
 
 
39,940
 
Private collateralized mortgage obligations
 
 
7,967
 
 
0
 
 
(85)
 
 
7,882
 
 
 
$
203,525
 
$
1,155
 
$
(1,867)
 
$
202,813
 
 
 
 
December 31, 2014
 
 
 
Gross
 
Gross
 
Gross
 
 
 
 
 
Amortized
 
Unrealized
 
Unrealized
 
Fair
 
 
 
Cost
 
Gains
 
Losses
 
Value
 
 
 
(In thousands)
 
SECURITIES AVAILABLE FOR SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities
 
$
3,876
 
$
23
 
$
0
 
$
3,899
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
 
123,981
 
 
1,501
 
 
(423)
 
 
125,059
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
352,483
 
 
1,075
 
 
(6,077)
 
 
347,481
 
Private mortgage-backed securities
 
 
29,967
 
 
291
 
 
0
 
 
30,258
 
Private collateralized mortgage obligations
 
 
85,175
 
 
688
 
 
(728)
 
 
85,135
 
Collateralized loan obligations
 
 
127,397
 
 
0
 
 
(2,172)
 
 
125,225
 
Obligations of state and political subdivisions
 
 
23,511
 
 
810
 
 
(3)
 
 
24,318
 
 
 
$
746,390
 
$
4,388
 
$
(9,403)
 
$
741,375
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SECURITIES HELD FOR INVESTMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
$
67,535
 
$
812
 
$
0
 
$
68,347
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
114,541
 
 
695
 
 
(280)
 
 
114,956
 
Collateralized loan obligations
 
 
25,828
 
 
0
 
 
(343)
 
 
25,485
 
 
 
$
207,904
 
$
1,507
 
$
(623)
 
$
208,788
 
 
Proceeds from sales of securities during 2015 were $60.3 million with gross gains of $633,000 and gross losses of $472,000. Proceeds from sales of securities during 2014 were $21.5 million with gross gains of $456,000 and no gross losses. Proceeds from sales of securities during 2013 were $67.3 million with gross gains of $792,000 and gross losses of $373,000.
 
On May 31, 2014, management identified $158.8 million of investment securities available for sale and transferred them to held for investment. The unrealized holding losses at the date of transfer totaled $3.1 million. For the securities that were transferred into the held for investment category from the available for sale category, the unrealized losses at the date of transfers will continue to be reported in other comprehensive income, and will be amortized over the remaining life of the secuiruty as an adjustment of yield consistent with the amortization of a discount. The amortization of unrealized holding losses reported in equity will offset the effect or interest income of the amortization of the discount. As of December 31, 2015 and 2014, the remaining unrealized holding losses totaled $2.3 million and $2.8 million, respectively.
 
Securities at December 31, 2015, with a carrying and fair value of $171.9 million and $172.8 million, respectively, were pledged as collateral for United States Treasury deposits, other public deposits and trust deposits. Securities with a carrying and fair value of $172.0 million were pledged as collateral for repurchase agreements.
 
The amortized cost and fair value of securities at December 31, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.
 
 
 
Held for Investment
 
Available for Sale
 
 
 
Amortized
 
Fair
 
Amortized
 
Fair
 
 
 
Cost
 
Value
 
Cost
 
Value
 
 
 
(In thousands)
 
Due in less than one year
 
$
0
 
$
0
 
$
225
 
$
225
 
Due after one year through five years
 
 
0
 
 
0
 
 
71,031
 
 
70,387
 
Due after five years through ten years
 
 
41,300
 
 
39,940
 
 
118,429
 
 
117,480
 
Due after ten years
 
 
0
 
 
0
 
 
13,632
 
 
13,826
 
 
 
 
41,300
 
 
39,940
 
 
203,317
 
 
201,918
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
 
64,993
 
 
65,551
 
 
192,224
 
 
191,749
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
89,265
 
 
89,440
 
 
242,620
 
 
238,190
 
Private mortgage-backed securities
 
 
0
 
 
0
 
 
32,558
 
 
31,792
 
Private collateralized mortgage obligations
 
 
7,967
 
 
7,882
 
 
77,965
 
 
77,957
 
Other debt securities
 
 
0
 
 
0
 
 
8,764
 
 
8,740
 
Private commercial mortgage backed securities
 
 
0
 
 
0
 
 
41,127
 
 
40,420
 
 
 
$
203,525
 
$
202,813
 
$
798,575
 
$
790,766
 
 
The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flows analyses, using observable market data where available. The tables below indicate the amount of securities with unrealized losses and period of time for which these losses were outstanding at December 31, 2015 and December 31, 2014, respectively.
 
 
 
December 31, 2015
 
 
 
Less than 12 months
 
12 months or longer
 
Total
 
 
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
 
 
Value
 
Losses
 
Value
 
Losses
 
Value
 
Losses
 
 
 
(In thousands)
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
$
112,236
 
$
(1,082)
 
$
14,508
 
$
(256)
 
$
126,744
 
$
(1,338)
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
97,512
 
 
(973)
 
 
147,266
 
 
(4,333)
 
 
244,778
 
 
(5,306)
 
Private mortgage-backed securities
 
 
31,792
 
 
(766)
 
 
0
 
 
0
 
 
31,792
 
 
(766)
 
Private collateralized mortgage obligations
 
 
19,939
 
 
(321)
 
 
31,533
 
 
(472)
 
 
51,472
 
 
(793)
 
Collateralized loan obligations
 
 
101,601
 
 
(1,642)
 
 
60,922
 
 
(1,612)
 
 
162,523
 
 
(3,254)
 
Obligations of state and political subdivisions
 
 
11,570
 
 
(110)
 
 
0
 
 
0
 
 
11,570
 
 
(110)
 
Corporate and other debt securities
 
 
31,342
 
 
(416)
 
 
0
 
 
0
 
 
31,342
 
 
(416)
 
Private commercical mortgage-backed securities
 
 
37,838
 
 
(720)
 
 
0
 
 
0
 
 
37,838
 
 
(720)
 
Total temporarily impaired securities
 
$
443,830
 
$
(6,030)
 
$
254,229
 
$
(6,673)
 
$
698,059
 
$
(12,703)
 
 
 
 
December 31, 2014
 
 
 
Less than 12 months
 
12 months or longer
 
Total
 
 
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
 
 
Value
 
Losses
 
Value
 
Losses
 
Value
 
Losses
 
 
 
(In thousands)
 
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities
 
$
100
 
$
0
 
$
0
 
$
0
 
$
100
 
$
0
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
 
36,890
 
 
(153)
 
 
21,640
 
 
(271)
 
 
58,530
 
 
(424)
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
100,148
 
 
(833)
 
 
170,400
 
 
(5,523)
 
 
270,548
 
 
(6,356)
 
Private collateralized mortgage obligations
 
 
61,554
 
 
(914)
 
 
10,091
 
 
(157)
 
 
71,645
 
 
(1,071)
 
Collateralized loan obligations
 
 
100,714
 
 
(1,769)
 
 
24,511
 
 
(403)
 
 
125,225
 
 
(2,172)
 
Obligations of state and political subdivisions
 
 
1,734
 
 
(3)
 
 
0
 
 
0
 
 
1,734
 
 
(3)
 
Total temporarily impaired securities
 
$
301,140
 
$
(3,672)
 
$
226,642
 
$
(6,354)
 
$
527,782
 
$
(10,026)
 
 
The two tables above include securities held to maturity that were transferred from available for sale to held to maturity on May 31, 2014. Those securities had unrealized losses of $3.1 million at the date of transfer. The fair value of those securities in an unrealized loss position for less than 12 months at December 31, 2015 and December 31, 2014 is $38.9 million and $32.3 million, respectively. The unrealized losses on those securities in an unrealized loss position for less than 12 months at December 31, 2015 and 2014 is $0.4 million and $0.3 million, respectively. None of these securities were in an unrealized loss position for more than twelve months at December 31, 2015 and December 31, 2014, respectively.
 
At December 31, 2015, approximately $1.6 million of the unrealized losses pertain to private label securities secured by collateral originated in 2005 and prior. Their fair value is $83.3 million and is attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The collateral underlying these mortgage investments are 30- and 15-year fixed and 10/1 adjustable rate mortgage loans with low loan to values, subordination and historically have had minimal foreclosures and losses. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.
 
At December 31, 2015, the Company also had $6.6 million of unrealized losses on collateralized mortgage obligations and mortgage backed securities of government sponsored entities having a fair value of $371.5 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors , management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.
 
At December 31, 2015, the Company also had $3.3 million of unrealized losses on collateralized loan obligations having a fair value of $162.5 that were attributable to a combination of factors, including relative changes in interest rates, spreads and interest movements since the time of purchase. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.
 
At December 31, 2015, remaining securities categories had unrealized losses of $1.2 million and summed to a fair value of $80.8 million, but losses have been outstanding for less than twelve months. Management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not change in credit quality.
 
As of December 31, 2015, management does not intend to sell securities that are in unrealized loss positions and it is not more likely than not that the Company will be required to sell these securities before recovery of the amortized cost basis. Therefore, management does not consider any investment to be other-than-temporarily impaired at December 31, 2015.
 
Included in other assets is $16.4 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. At December 31, 2015, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $16.4 million of cost method investment securities.
 
The Company also holds 11,330 shares of Visa Class B stock, which following resolution of Visa litigation will be converted to Visa Class A shares (the conversion rate presently is 1.6483 shares of Class A stock for wach share of Class B stock) for a total of 18,675 shares of Visa Class A stock. Our ownership is related to prior ownership in Visa's network, while Visa operated as a cooperative. This ownership is recorded on our financial records at zero basis.